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London â€” The dollar rose on Tuesday before the start of a Federal Reserve policy meeting expected to raise US interest rates while eurozone government bond yields headed higher as investor concern over an election in the Netherlands appeared to ease slightly.

The pound hit an eight-week low against the dollar after the British government won parliamentary approval to trigger talks on leaving the EU, reversing Mondayâ€™s gains when Scotlandâ€™s leader demanded a referendum on independence.

European shares dipped. Stocks in Asia had risen and Wall Street traded in tight ranges on Monday before the Fed meeting.

Traders were also looking ahead to Wednesdayâ€™s election in the Netherlands, seen as a test of populist sentiment in Europe.

A poll on Monday showed Prime Minister Mark Rutteâ€™s conservatives taking 27 seats in the 150-seat parliament, three more than in the pollsterâ€™s previous survey and slightly outpacing gains for nationalist Geert Wildersâ€™s Party for Freedom (PVV).

Wilders has advocated a referendum on the countryâ€™s euro membership.

Yields on benchmark 10-year German government bonds, which are seen as among the worldâ€™s safest assets, briefly hit 14-month highs above 0.5%. Higher US treasury yields due to the Fed outlook, signs of recovery in the eurozone economy and an easing of concern that the French and Dutch votes could bring populist, anti-euro leaders to power have pushed yields higher in recent weeks.

"At the start of this year yields were trending higher, and then there were escalating nerves about upcoming political risks that pulled yields back down. Now investors have revised these political risks somewhat and now we are heading back towards those yield levels seen in January," DZ Bank strategist Daniel Lenz said.

The dollar index, which measures the greenback against six other major currencies, rose 0.3%. The euro fell 0.1% to $1.0640 while the yen fell 0.1% to ÂĄ115.03.

Sterling fell 0.7% to $1.2129, having dropped as far as $1.2107, its weakest since January 17.

A Fed rate rise on Wednesday is seen as all but certain and investors will focus on new economic forecasts and any clues to how many rate increases can be expected in 2017.

While higher rates would raise companiesâ€™ costs, they are also seen as evidence of economic recovery.

"Marchâ€™s Fed meeting, even if it does suggest that FOMC [Federal open market committee] members want a faster pace of rate hikes, is looking unlikely to cause market panic, and instead we could see US stocks actually rise on Wednesday night, and the dollar and US yields retreat," City Index Research Director, Kathleen Brooks, said in a note.

European shares dip

The pan-European Stoxx 600 share index fell 0.3%, led lower by a 0.8% fall in banks.

Sterling weakness helped Britainâ€™s FTSE 100 gain 0.1%.

MSCIâ€™s broadest index of Asia-Pacific shares outside Japan was up 0.2%, while Japanâ€™s Nikkei closed down 0.1%. Shares in Toshiba closed up 0.5% after plunging as much as 8.8%, their biggest one-day loss for almost a month.

Toshiba failed to submit audited third-quarter earnings for a second time on Tuesday, gaining a one-month extension, and said it would speed up looking at whether to sell a majority of its US nuclear unit Westinghouse.

Chinaâ€™s blue-chip CSI300 index dipped 0.1% after data showing investment was higher than forecast in the first two months of the year.

Oil prices held near three-and-a-half-month lows hit on Monday on concern about a global glut of crude as investors awaited a series of reports on output.

Brent, the international crude benchmark, traded 7c higher at $51.41 a barrel.